2023 In Numbers

The S&P 500 returned 24.23% in 2023, but that return also makes 2023 the 22nd-best year in the history of the index. [The Daily Peel... ](=) January 2, 2024 | Peel #617 Silver banana goes to... [CFA Institute. ]( In this issue of the Peel: - The S&P 500 returned 24.23% in 2023, but that return also makes 2023 the 22nd-best year in the history of the index. - Fisker and T-Mobile US had a ripe day, while Coinbase and LYFT Inc saw their share price decline for the day. - Since the Supreme Court overturned the PASPA that banned gambling in sports in 1992, the sports betting industry has absolutely exploded. Market Snapshot Happy Tuesday, apes. And more importantly, Happy 2024. We are now officially just as close to 2040 as we are to 2008 and the same to 2030 as we are to 2018. Hope you’re not annoyed at seeing facts like that yet because if 2024 is like every other year, oh, they’re coming. Despite all the “New Year, New Me’s” out there, we certainly hope it’s not a new market. 2023 finished with the S&P 500 up 24.23%, the Nasdaq up 43.42%, and the stupid Dow up only 13.70%. Shoutout to the Magnificent 7 on the first two, though. Friday wasn’t a friendly way to end it, however, with the 3 U.S. major indexes all selling off for the most part. The Dow was basically flat, losing just 5bps, while the Russell 2k led the way lower, losing 1.63%. Needless to point out, WSO Alpha joined in on the losses as well, losing 0.24% to end the week, month, and year. That brought the portfolio’s total 2023 return to 32.23%, beating the S&P but missing our benchmark (the Nasdaq). Not bad, apes—game respect game. Set the standard. [image]( If you care about the state of the world and want to set it on a better course, we have a solution that may be somewhat surprising: work in finance. At CFA Institute, our courses are deeply rooted in ethical perspective. But we don’t just teach — we create codes of conduct, and impact key policy issues with global governments and regulators. Visit [cfainstitute.org/setthestandard](=) to join a global network of investment professionals setting the standard through performance with purpose. [Get Started](=) Banana Bits - Evacuations are ongoing in Japan as the New Year welcomed the country with a brutal, tragic [7.6 magnitude earthquake.]( - You get a transcript, so Joe Biden and all our other Presidents probably should, too, and the WSJ tried their best to [make one here.]() - College Football Playoffs going into OT is something we’re always here for, and watching [Michigan pull out the W]() was the real present this holiday season. - But sadly, I’m actually more of a Texas fan, and that game [went less well for the Longhorns.]( Macro Monkey Says 2023 In Numbers Alright, the arbitrary date on which we all agreed to change the number representing the number of times we’ve completed a revolution around the sun has come and gone. Happy 2024 and all that jazz, but let’s turn the market back on. And for what it’s worth, not every calendar uses 4-6 years after Jesus was born to start counting revolutions—according to [this page](, it’s 2567 in the Buddhist calendar, 6773 in the Assyrian calendar, 1444-1445 in the Islamic calendar, and 4720-4721 in one of the many traditional Chinese calendars. Anyway, shoutout to the Gregorian calendar because 2023 was an interesting one, to say the least. Heading into 2024, it’s helpful to have some context of what happened, where we stack up compared to years past, and maybe peek into where we might be going. As we said above, the S&P 500 returned 24.23% in 2023. But that return also makes 2023 the 22nd-best year in the history of the index and brings its average annual return since 1928, including dividends, to 7.86%. "Heading into 2024, it’s helpful to have some context of what happened, where we stack up ..." And just because I know you’re now dying to know, our best year ever was 1933 at 46.59%, coming just two years after our worst ever in 1931 with a screen-punching 47.07% loss. Volatility clusters, I guess. Throughout 2023, unemployment ranged from 3.4%-3.9%, right in line with the lowest levels seen in the past 50 years and close to our best ever in the post-WWII days. Along with unemployment, inflation scared the ever-loving sh*t out of us all year, ranging from 6.4% in January to the 3% flat in June. Naturally, that 3.4% low in unemployment also fell in January, suggesting there might actually be some validity to the [Taylor Rule](), which some economists love to hype up. Meanwhile, as inflation has trended from 6.4% in January to the 3.1% seen in November, the number of job additions per month in the U.S. has plummeted from nearly 500k during that first month to 199k last month. "... unfortunately, means we’re tapping the brakes on the economy. " Essentially, we’ve seen a recovery from the inflationary straightjacket our wallets endured in 2022, but that, unfortunately, means we’re tapping the brakes on the economy. Interest rates are, of course, the main focus for investors right now, but for the economy, it’s hard not to pay attention to consumer spending. Spending (a.k.a. donating to the economy), as measured by U.S. retail sales, has essentially remained range bound between $594bn and $612bn monthly over the past year. At the same time, declines in wage growth mean that a lot of that spending is getting put on the plastic, racking up a total consumer credit card debt balance of $1.08tn by the end of Q3. Yes, that’s the highest it’s ever been, by the way. So, there’s reason to be optimistic but plenty of reason to be skeptical as well. With the S&P sitting just below all-time highs, it might feel toppy, but it turns out that all-time highs are actually bullish historically. Since 1950, years following a +20% year average, a ~10% annual return, just above the actual historical average noted above. According to Ned Davis Research, there have been 14 instances where the market reached an all-time high (like we did on Jan 3rd, 2022). In the following year, markets averaged a 14% return and have risen in 13 out of 14 of those instances. But at the same time, if the slowdown in labor markets continues and brings along a slowdown in consumer spending, markets will have a tough time ignoring that. We get December jobs data on Friday and will continue to get more year-end data over the next few weeks, so as always, we’ll all wanna stay tuned. What's Ripe Fisker (FSR) $1.75 (↑ 15.89% ↑) - Much like the additional 3-5mins you add on at the end of any time you’re playing basketball because you “can’t leave on a miss,” Fisker figured out how to end 2023 on a good note… after falling more than 90% the rest of the year. - The EV stock everyone always forgets about finally found some good news, and it only took 365 days to do it. Deliveries boomed more than 300% from the third to fourth quarter as demand for the company’s Ocean SUV spiked. - Total deliveries for 2023 clocked in at 4,700, marking their best year yet. Now, in 2024, rumors allege the firm’s new goal is gonna be figuring out how to actually start making some money off of it. T-Mobile US (TMUS) $160.33 (↑ 0.87% ↑) - For most of us, the reaction to bad news is usually… bad. But, apparently, T-Mobile isn’t most of us. - The pink phone company saw shares earn a mild gain on Friday while most of its peers moved opposite as a big, scary dilution event finally came and went, freeing shareholders from worrying about this going forward. - Basically, the telco formerly known as Sprint was majority owned by Japanese investment giant Softbank, so when T-Mobile and Sprint merged, Softbank retained hella ownership of the combined company. As part of the agreement, Softbank had the option to be given a sh*tton more shares if conditions were met. - Those conditions included keeping $TMUS’s share price above $150/sh on a volume-weighted average price basis for 45 days, and with December’s gain along with good vibes earlier in the year, that mark was hit on Friday, giving Softbank an additional $7.6bn at no cost whatsoever on Friday. Not bad, eh? What's Rotten Coinbase (COIN) $173.92 (↓ 6.68% ↓) - While most of us were learning that BTC and digital assets were the best-performing major asset classes of 2023, the industry and related stocks decided to take Friday off. - But no one really noticed because the prices of BTC and others were right back up again this weekend. Coinbase, caught in the selloff on Friday, can’t be too mad, however, as shares ripped 391% for the year. LYFT Inc (LYFT) $14.99 (↓ 3.54% ↓) - Looks like Lyft needs to change its name to “drop” because that’s all the stock did on Friday. Sorry for ruining your morning already with that, but I thought of it weeks ago and finally got to use it. - Anyway, Lyft shares did the opposite of their name on Friday as Nomura downgraded their rating from neutral to sell. It wasn’t all bad news, however, because the analysts clearly drank their NYE champagne a little early as the bank raised its price target while downgrading its outlook. - With a $13/sh target, though, that still implies ~13.2% downside. And I gotta say, after taking a 12-minute Lyft ride this weekend for $6.83, it’s no wonder why this place isn’t making a dime. Thought Banana Odds of Legalized Sports Betting Watching Barstool CEO Dave Portnoy [throw $1mn]() on Michigan to beat Alabama last night and then [rant]() in celebration of making $1mn when the Wolverines pulled out the win was a nice reminder of how much fun it is to gamble. And more importantly, that was a helluva game, huh? On the same day, nearly 11mn lucky North Carolinians could officially get in on the action, too, as sports betting officially became legal in the state. That makes North Carolina officially the 37th state to legalize the activit—, no—*artform that is gambling on sports. 650k Vermonters will make that 38 on the 11th, too, by the way. Since the Supreme Court blessed us with the ability to expand our degeneracy to the wide world of sports in 2018 by overturning the Professional and Amateur Sports Protection Act (PASPA) that banned gambling in sports in 1992, the industry has absolutely exploded. "... for those who follow the rules, the industry is estimated to be worth just about $10bn ..." Getting exact figures is tough because so many of your apes and *ssholes out there have bookies or some other still-illegal outlet for your personal degeneracy. But, for those who follow the rules, the industry is estimated to be worth just about $10bn—and that’s just online. That’s expected to [grow ~13% per year]( through 2028, bringing the U.S. to the #1 spot globally in yet another category, overtaking the current degeneracy king, Australia, by then. Along with that, companies like DraftKings, Fanduel, MGM, Barstool itself, and plenty of others are sitting on what many see as an absolute goldmine. Investors sure think so, at least, with DraftKings surging over 209% in 2023 alone. Hell, even Disney is getting in on the action (literally) with the launch of ESPN Bet on November 14th. Going from “nothing” to a $10bn industry in just 6 years is insane, but as the remaining 12 loser states that hate fun are much less eager to fold on this one, peak growth for the industry could be long in the rearview mirror. "These two alone make up nearly 20% of the entire country’s population ..." The two most populous U.S. states, California and Texas, are included in those fun-hating states. These two alone make up nearly 20% of the entire country’s population, so legalization there would sure do the trick. But in both, the idea has been a lot like the decriminalization of weed at the federal level. Some cool representatives are out here swinging, but voters aren’t yet entirely on board. Last night’s college football playoff games certainly gave us a good reminder, but with the national championship next Monday, NFL playoffs all month, and the Super Bowl in February followed by March Madness shortly after, there’s gonna be plenty of opportunity to make yourself rich/gamble your life away in the coming months. And just remember, you’re always one bet away from financial freedom… but stocks are still more fun if you ask me. The Big Question: How big will the sports betting industry become? Will sports betting become fully legal all across the United States? Are you getting in on DraftKings? Banana Brain Teaser Friday — I am compiling a world almanac, and it now contains lots of pages. I know that it takes 121 digits to print the page numbers in sequence. How many numbered pages does the book have, and how many times does the number 9 appear? Answer There are 65 pages, and the number 9 appears 6 times. Today — Rob and Bob played a challenging game several times, betting one pebble on the outcome every time. Rob won seven pebbles, while Bob won seven times. There were no ties. How many times did they play? Shoot us your guesses at vyomesh@wallstreetoasis.com. Wise Investor Says “In a sense, value investing is a large-scale arbitrage between security prices and underlying business value” — Seth Klarman How would you rate today’s Peel? [All the bananas]() [Decent](=) [Rotten AF](=) Happy Investing, Patrick & The Daily Peel Team Was this email forwarded to you? [Be smart like your friend](. [ADVERTISE](=) // [WSO ALPHA]() // [COURSES]( // [LEGAL]( Don't want The Daily Peel? 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